After more than six years of annual wholesale rate increases of 1.5% under former CEO Bill Johnson, TVA has changed the way it deals with local distributors by encouraging them to sign ”always green” electricity contracts in exchange for a 3.1% interest rate cut, in addition to other offers. The majority of VAT distributors have signed the long-term contracts, which never expire and require a 20-year termination. But as our complaint indicates, indeterminate contracts undermine the bargaining power of local electricity companies to negotiate for cleaner, cheaper electricity. TVA said, however, that the new contractual flexibility between 800 megawatts and 2000 megawatts could allow for solar or other generation if the 154 local energy companies used long-term electricity contracts. Long-term partnership contracts are also at odds with the requirements approved by the VAT Board of Directors. On August 22, 2019, TVA`s Board of Directors authorized management to enter into long-term partnership agreements with the CCP ”based on the satisfactory conclusion of the required environmental assessments.” VAT Vice President Buddy Eller said the 20-year contracts TVA offered last year to replace previous five-year power purchase contracts provide more stability for VAT and its distributors for long-distance planning. More than 90% of the $11 billion in VAT electricity sales per year are now part of the 20-year contracts. Chickamauga is the 142nd local energy company to sign the new long-term VAT pact offered by the federal supplier last fall. In order to encourage distributors to sign the current 20-year power purchase contracts, TVA began last year to offer 3.1% wholesale discounts to local businesses that accept the long-term partnership with TVA. As renewable electricity becomes increasingly affordable, supporters in the region fear that VAT distributors and their customers will be abandoned if neighbouring countries switch to cleaner and more affordable energy systems. An adequate NEPA analysis for long-term VAT agreements would have provided local electricity companies, their customers and members with important information on the projected impact of contracts on the environment, and above all alternatives to these agreements.
Our legal action also accuses the treaties of violating the Federal Environmental Protection Act (NEPA) because TVA did not conduct any significant environmental analyses and disclosures prior to the conclusion of the interminable agreements. In addition to the absurdly long 20-year termination required to exit a local electricity supplier from the contract, penalties are imposed on any distributor who terminates during these two decades of notice. Long-term agreements also limit the ability of local electricity companies to generate their own electricity to only 3 to 5% of their energy needs, with VAT providing most of the electricity supply mainly from dirty energy sources. Contracts replace existing agreements of different durations or expire.